This study by a sensitive and imaginative intellect is a substantive contribution to the literature developing the meaning of the concept of “the invisible hand” while simultaneously attempting to establish how interpretation can be structured to convey “understanding” albeit not “truth.”
Aydinonat’s argument regarding invisible-hand thinking is partly predicated upon two distinctions—one distinguishing between effects and causes as explanation and the other between emphasis on end states and on processes. His argument seems to diminish, if not reject, the conventional emphasis on the problems of existence, identity, and function of the invisible hand. Instead, he focuses on invisible-hand processes which he identifies in terms of unintended consequences, sensibly if not properly understood as referring to the results of processes of interaction and aggregation, decidedly not the consequence of a literal invisible hand. Indeed, the book lacks any substantive identification of an invisible hand steering the invisible-hand process. Some readers will find this omission a great loss; others will applaud the exclusion and Aydinonat’s constrained candor about it.
Aydinonat’s focus is on the process that brings about the emergence or persistence of institutions and macro-social structures as the unintended consequences of the aggregated interactions of individuals and thus on the conditions under which individual actions may lead to the social phenomenon in question. Inasmuch as such studies are ahistorical, the explanations they provide explicate only the process that may have brought about the phenomenon in question. Aydinonat quotes Robert Aumann that these studies are not a quest for truth but for understanding.
Chapter 1 introduces his dual argument which would both limit invisible-hand reasoning and extend or clarify the framework of, or leading to, understanding.
Chapter 2 explicates “the subset of the set of possible unintended consequences . . . relevant for understanding the models of institutions and macro-structures as unintended consequences” (p. 7).
Carl Menger on money (Chapter 3) and Thomas Schelling on residential segregation (Chapter 4) are analyzed as paradigmatic examples of explaining unintended consequences of human action, and especially of human interaction, and thereby invisible-hand explanations. They are predominantly considered to be paradigmatic examples of individualistic explanations, providing the mechanisms constituting and driving the invisible-hand process.
Chapter 5 examines invisible-hand explanations and emphasizes that “a proper understanding of what is implied by the notion of unintended consequences is necessary for a proper understanding of the invisible hand” (p. 91).
Two chapters examine whether progress has been made, through game theory and computer modeling, in understanding and explaining the emergence of money (Chapter 6) and of residential segregation (Chapter 7).
Aydinonat argues that models that characterize macro-social phenomena (institutions) should not be evaluated as unintended consequences in isolation from other related models of the same phenomenon. Recent models, he further argues, do not introduce new mechanisms; they test the logical soundness and plausibility of Menger’s arguments but do not bring us any closer to the real world.
Chapter 7 comprises lines of epistemological reasoning by which to enhance the empirical and historical plausibility of the models. These include a proper way of conceptualizing the phenomenon in question, the argument that similarity between models, and the real world amounts to some confirmation of the existence of certain known tendencies in the model world, and the related argument that further exploration of the premises and results of a model may provide enhanced confidence about the implications of an existing model. Methodologists will respond that these lines of reasoning can at best provide only marginal, and often frail, increases in confidence, likely to be exaggerated by devotees of particular models. The author himself may be cited for his arguments that (1) models facilitate explanation by providing proper conceptualization of the phenomenon under question, objecting that “proper conceptualization” is a primitive and potentially tautological term, (2) similarity between models and the real world may each be due to very different causes and is ultimately subjective, (3) the idea of partial potential explanations is hardly novel, and (4) explanations explicating the process that may have brought about the phenomenon in question will almost certainly be treated by their creator as if they in fact did. The methodologist may also respond that the arguments of the previous chapters make sufficient sense without these ultimately pseudo-epistemological arguments, and that movement toward one’s predispositions is no substitute for falsification and even less demanding requirements.
Aydinonat largely adheres to Aumann’s dictum that these studies are a quest not for truth but for understanding. Some readers may find him moving towards Adam Smith’s distinction between propositions that are true and those that set minds at rest, or soothe the imagination. It is one thing to speculate about the initial conditions that may lead to unintended consequences; it is quite something else to hold that purely speculative models can have explanatory power in regard to actual phenomena. Aydinonat’s efforts to extend the boundaries of understanding would be more compelling if he were able to establish when speculative interpretations are and are not justifiable intuitions. He has not transformed conjecture into truth; he only seems to be trying to do so. While he has enriched the dimensions and grounds for the understanding of speculative propositions that satisfy the mind, his claims that all of the interpretations he has expressed convey justifiable intuitions and that “realisticness,” “explication,” “credibility,” “exploration,” and “fitting things together” are parts of a framework that makes sense of the models, he has not shown that such terms constitute more than categories which have to be worked out in the process of developing “understanding.” Some readers will find unsatisfactory the extent to which his methodology reduces the ontological and epistemological status of invisible-hand thinking. But that status is even less than his work recognizes.
Aydinonat’s treatment of the invisible hand raises several problems. One is an awkward language problem with substantive consequences. Aydinonat says that he is exploring the unintended social consequences implied by the invisible hand. Is there an invisible hand that steers the mechanisms producing those consequences, or do invisible-hand processes not have an invisible hand separate from the processes per se? What is the invisible hand? Is there an invisible hand? Do different economic structures yield different invisible-hand-process results? The principal argument of Chapter 5 is at stake.
Aydinonat restricts his analysis to typically beneficial consequences. But interaction and aggregation, like externalites, can be both beneficial and harmful, depending on certain subjective and positional factors. Most specialists would find his restriction introduces circularity. This has been a problem with the entire Menger-Hayek tradition.
Emphasis on invisible-hand processes is sensible but fails to take note that doing so rejects the conventional understanding that posits an invisible hand with a specific identity and performing one or more functions. I agree with his view of the field but most specialists, I think, would be discomforted by it.
Emphasis on logicality can be akin to Smithian conjectural history in substituting ideology and predisposition for historical fact and its critique.
I suspect that this study will reinforce the concentration of attention on invisible-hand processes and diminish that on invisible-hand candidates and functions.
